New laws could give every Aussie an extra $2500 every year
Millions of Australians could gain thousands in extra pay and stronger bargaining power under new laws that will make it easier to switch jobs.
The federal government this week released draft legislation to ban non-compete clauses for workers earning less than $190,100 a year, which would cover about nine out of every 10 employees.
The Albanese Government this week released draft legislation to ban non-compete clauses for workers earning less than $190,100 a year. Louie Douvis
Research by the e61 Institute mentioned by the government suggests scrapping the clauses could lift affected workers’ wages by up to four per cent, worth about $2500 a year for a typical worker.
Non-compete clauses can restrict an employee from working for a rival business or setting up a competing operation for a period after leaving a job.
About one in five workers has one in their employment agreement, according to the e61 Institute.
Assistant Productivity Minister Andrew Leigh said removing them would give workers greater freedom to chase better pay and conditions.
“We’re getting rid of those for everyone earning under $190,100 – reforms that will kick in next year,” he told Canberra’s 2CC Radio Canberra on Tuesday.
The government is arguing making it easier to change employers could also help address Australia’s productivity problems by allowing people to take jobs better suited to them.
“Frankly, we know that over the course of a career, people’s biggest wage gains come not from getting wage gains from your current employer, but from shifting to a different employer,” Leigh said.
“So, you get those big personal wage gains, but you also get big productivity gains when people move to a company that’s a better fit.”
The government says the laws – first proposed in the 2025 federal budget – would still protect confidential information and intellectual property, while client non-solicitation clauses could remain.
But employer groups have warned the plan goes too far.
Removing the clauses could give workers thousands in extra pay and stronger bargaining power. AAP
Australian Industry Group chief executive Innes Willox warned businesses could be left in the lurch if staff with sensitive commercial information jump ship to competitors.
“There are many employees earning below $191,100 who are engaged in roles involving access to commercially sensitive or otherwise confidential information,” Willox said.
“Just think about employees working in sales roles, preparing commercial tenders or privy to confidential production processes or business plans.”
He also said businesses could become less willing to spend money training staff if employees were then free to take those skills directly to a competitor.
“This will undermine our competitive position internationally and will foreseeably hurt rather than help our already abysmal productivity levels,” he said.
The government rejects that businesses need broad non-compete clauses to retain staff, with Leigh saying employers should instead compete on what they offer workers.
“Well, I think if you want to hold on to your apprentices, you might need to make sure you’re offering them good conditions and good pay,” he said.
“That’s the basic rule of thumb for any employer.”
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